'Printing money does not hit annuities'

The Bank of England’s money-printing programme has not hit pensioners’ annuity
rates, the pensions minister has said.

Saga, a campaign group for the over-50s, estimates that more than a million pensioners have retired with permanently lower incomes because of the impact of the Bank’s emergency policiesPhoto: Ian Jones

The BOE started printing money in 2009. Since then, annuity rates have fallen by around a quarter.

Mr Webb told the BBC’s Daily Politics show that there was no clear link between the two.

“Annuity rates have been falling year after year after year. There is no clear evidence that QE has made a difference to that,” he said. “Annuity rates are falling partly because people are living longer.”

In fact, members of the Bank’s Monetary Policy Committee have accepted a link between QE and annuities.

Charlie Bean, the deputy governor of the Bank, told MPs in February that “annuity rates might have been driven down by asset purchases”.

David Miles, an MPC member, said in March: “It is inevitable that there are some people that have been made worse off by the direct impact of the Bank’s asset purchases on gilt yields.”

Ros Altmann, the head of Saga and a persistent critic of QE, said that ministers should be more willing to admit that the emergency policies introduced after the financial crisis have hurt pensioners.

“The first step to starting to put this right is for them to acknowledge the damage this has have done,” she said.

To mitigate the impact of QE on savers and pensioners, she said, ministers should offer retired people higher ISA limits to reduce the tax bill on their savings. Rules on “drawdown” pensions should also be relaxed, she said.